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The stock market continues to stay hopeful with new developments in COVID-19 drug vaccines and strong U.S. manufacturing activity for the month of June.
After ending the Q2 2020 as the best quarter in the last two decades, the U.S. stock market remained positive on the commencement of Q3 2020. The market sentiment remains optimistic about the positive development of the Coronavirus vaccine as well as the strong economic data.
On Wednesday, July 1st, the S&P 500 (INDEXSP: .INX) and the Nasdaq Composite (INDEXNASDAQ: .IXIC) made some early gains during the day. Both the indeces closed the day on a positive note. The S&P 500 surged 0.5% closing at 3315.86 levels. The Nasdaq Composite made its closing just under 1% at 10,154.63 levels.
On Wednesday, pharma giants Pfizer Inc (NASDAQ: PFE) and BioNTech SE (NASDAQ: BNTX) released a COVID-19 vaccine drug candidate created using neutralizing antibodies. Although the results are available online, it needs a review from the medical journal. Kathrin U. Jansen, head of vaccine research and development at Pfizer, said:
“We are encouraged by the clinical data of BNT162b1, one of four mRNA constructs we are evaluating clinically, and for which we have positive, preliminary, topline findings.”
If the vaccine passes through regulatory approval, Pfizer said that it will release 100 million doses by year-end and over 1.2 billion by the end of 2021. Last Friday, the U.S. registered the largest single-day jump in COVID-19 cases. The massive jump in COVID-19 cases in the state of Arizona, Florida, and Texas has caused major worry.
White House health advisor Dr. Anthony Fauci warned earlier this week that the single-day cases in the U.S. could jump over 100,000. Things have got a little more concerning at this stage. On Tuesday, The Treasury Secretary and Fed Chairman released a joint statement stating that control of the COVID-19 spread is key to the economic rebound. The U.S. remains the worst affected cases with nearly 2.6 million cases.
U.S. Manufacturing Activity Surges and Boosts Stock Market
As per the latest data by the Institute for Supply Management, the U.S. manufacturing activity grew the highest since April 2019. And it has a very obvious influence on teh stock market. After a major contraction in May during the lockdown, the manufacturing activity has seen a sharp recovery last month. Speaking on the manufacturing data, Thomas Simons, money market economist at Jefferies, told CNBC:
“Looking ahead, we will likely see continued improvement in July. The recent spikes in COVID cases in various states across the country have only very recently resulted in walk-backs of reopening plans, and the majority of those policy changes have focused on social settings rather than anything to do with manufacturing.”
Later today, the U.S. government will be releasing the report of monthly jobs. The COVID-19 crisis has hurt businesses badly as unemployment has spiked to a multi-year high. The Fed thinks that the economy will need more monetary policy for economic recovery.